Business & Tech
Stericycle Accused of Fraudulent Billing That Led to Stock Price Drop: Class Action Suit
The lawsuit filed by 2 pension funds for Florida firefighters claims investors lost millions over the Lake Forest company's practice.
A class-action lawsuit by two firefighter pension funds in Florida accuses a Lake Forest-based medical waste disposal company of fraudulent billing practices that led to a drop in the company's stock and causing investors to lose millions, according to the Cook County Record.
The lawsuit—filed by the St. Lucie County Fire District Firefighters' Pension Trust Fund and the Boynton Beach Firefighters' Pension Fund on July 11 in U.S. District Court for Northern Illinois—claims Stericycle exercised a scheme to jack up the rates of its "small quantity customers," who make up 63 percent of the company's revenue, the report stated. The idea is that customers would react in one of two ways, according to the report:
- not notice the rate increases
- notice the increases but not saying anything.
But the plan backfired, and Stericycle lost enough customers that the company took a financial hit in the third quarter of 2015, the report stated. Stericycle's stock fell 19 percent in October 2015 and dropped another 22 percent in April 2016, the report added. The company, however, blamed the downturn on market conditions.
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RELATED: Graphic Anti-Abortion Fliers Upset Some Lake Forest Residents
The class action suit is asking to cover investors who purchased Stericycle shares anytime from Feb. 7, 2013, to April 28, 2016, the report stated. The firefighter pension funds bought more than 3,000 shares of common stock between them in late 2015, the report added.
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Stericycle, which earned around $3 billion last year, recently came under fire from an Ohio-based anti-abortion group that claimed the company disposed of aborted fetuses from Planned Parenthood. Because of that, members of the group, Created Equal, handed out graphic fliers in April throughout Lake Forest, including the neighborhood where Stericycle President-CEO Charles Alutto lived.
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